Monday is bin day in Alistair McLean's street. The neighbours, like clockwork, line their bins along the kerb, ready for pick-up that morning.

And like every week, there's always one house oddly out of sync.

In more than two years, Alistair has never seen a sign anyone lives in the place on the corner — no bins, no cars, no lights. But the grass along the fence gets trimmed and the mail never piles up, so it's not as if the home has been completely abandoned.

''They've basically mothballed the house,'' Alistair said. ''You'd only know it was empty if you lived in the area.''

Advertisement

In fact, there's good reason to believe there could be tens of thousands of similarly empty homes across Melbourne. (And, presumably, in every other capital city).

A study by Earthsharing Australia estimates there are 90,730 vacant properties around the city, enough homes to provide housing for nearly a quarter of a million people.

It amounts to a vacancy rate of nearly 6 per cent, challenging industry claims the city is facing a housing shortage.

They arrived at this staggering statistic through an analysis of water use, with the Speculative Vacancies Report classifying as ''vacant'' any home that uses less than 50 litres of water per day over a six-month period.

With average daily water consumption at 140 litres per person and 350 litres per household, the report's author Philip Soos considers 50 litres per day a conservative cut-off point. (A water-saving shower head uses six to seven litres of water per minute and a toilet about four litres per flush).

Soos notes the data could be skewed by capturing low-use residences like holiday homes, blocks of units that run off a single meter or properties under renovation.

But it's a lot harder to dismiss the findings that tracked the number of homes using no water over a six-month period. This part of the survey covered the 361,410 residences serviced by City West Water, which accounts for about one-quarter of the homes in the city.

Soos found 14,252 properties, or nearly 4 per cent, were effectively empty over that half-year.

Considering the vacancy rate in the private rental market alone is estimated at 1.9 per cent to 2.9 per cent, there appears to be a substantial glut of under-utilised housing out there.

Armed with the report — and a list of allegedly long-term vacant properties submitted by readers — I spent a day driving Melbourne's suburbs to see the state of affairs from the kerb-side.*

Broken windows and garbage-strewn gardens made the decrepit and unliveable homes easy to spot but they clearly account for only a handful of properties.

Vacant lots were more numerous, fenced off and overgrown since the house that was once there had been demolished.

But it's clear that the bulk of properties — if the data is correct — are perfectly good homes that owners are intentionally leaving empty.

Readers sent me addresses for well-kept properties where no living soul had been seen for a year, two years, even six years. Lawns were trimmed, mail was collected, but the driveway was always empty with shades drawn on perpetually dark rooms.

So why is it happening?

Earthsharing Australia, which is affiliated with tax reform group Prosper Australia, believe it's the direct result favourable tax and incentive-driven housing policies that encourage speculation, land banking and drive up house prices.

''Faced with this set of circumstances, investors may conclude that renting properties make for dubious investments when factoring in the wide array of costs associated, including time and effort.''

In other words, it's a better deal to turn a viable home into a lock-up-and-leave investment.

And it's certainly been documented before in Melbourne, particularly at the top end of the market.

Figuring out what to do about it, however, is a lot more problematic.

Private property rights recognise — with certain limitations — that an owner is free to do what they want with the land or home they purchase.

It's hard to see a fair, or workable, way that councils or governments could force the owner of an unused home to rent it out.

Vacant land is another matter. Some councils already charge a premium to rates for residential land left fallow.

Others do not, meaning owners are able to reap a windfall in rising land prices while paying less than others to hold their property.

In one case, a vacant 167-square-metre block was charged $991 for the year, while the liveable house next door on a 158-square-metre allotment paid $1540.

Valuers will also tell you that vacant blocks and derelict homes can hurt the values of other property holders in the street, especially direct neighbours.

For their part, Earthsharing Australia and Prosper Australia argue that a ''substantial'' land value tax would help ''blunt'' capital growth and encourage owners of unused homes to put them on to the rental market.

At the very least, the Speculative Vacancies Report chips away at industry claims the city is facing a serious housing supply shortage.

*The data provided by City West Water and Yarra Valley Water was aggregated at the suburb level and no individual properties were identified.

I would also like to acknowledge the work of my Age colleague Henrietta Cook in tracking down these vacant properties.

(Disclaimer: I am an owner-occupier of a single-dwelling home in Melbourne's inner suburbs. I do not own any investment properties. I am not in the market to sell or buy)

What do you think about this report? What should be done to encourage the development or use of these vacant homes?

188 comments so far

How about introducing squatters rights? Should clear things up pretty quickly I'd imagine.

Commenter

Peter

Location

Melbourne

Date and time

August 27, 2012, 1:54PM

I second this motion.

Commenter

the D.Rock

Location

Merde

Date and time

August 27, 2012, 2:24PM

Yes, we should have a list of those empty houses, so all our uni students can move in for free.

Commenter

Will

Location

Melb

Date and time

August 27, 2012, 3:37PM

Yes... just bring your own locks!... and a screw driver. It could be a special lecture series for Orientation Week.

Commenter

the D.Rock

Location

Merde

Date and time

August 27, 2012, 4:51PM

Hear, hear.

It's essentially a 'use it or someone else will' message to landlords. Works in the Uk and Netherlands. In fact, friends in Amsterdam were what's called 'anti-squatters' - living in a building with approval from the owner because they knew they'd take care of the place and stop it becoming completely derelict.

How about it Greens?

Commenter

humanist

Location

melb

Date and time

August 27, 2012, 5:37PM

The article mentions briefly "favourable tax policies" - get rid of negative gearing. All taxpeyers subsidise land speculators with a tax break for losing money in the short term in the hope that the capital gain at the end (taxed at only 15% thanks to John Howard) outweighs the loss.If anyone can tell me why we should keep it please tell me. And no, rents will not skyrocket. For every fall in rents people will move from renting to buying AND rents should be priced on yield; surpisingly assets should be valued off the income they return and there are 2 ways for yields to go up - put the rent up or the price of the asset can fall

Commenter

Franky

Location

Sydney

Date and time

August 27, 2012, 9:37PM

No thanks - already causes problems in the UK with people exploiting the law. It's their property - as long as it's kept clean and rates are paid, why the problem?

Commenter

Get a Grip

Location

Date and time

August 28, 2012, 7:19AM

Where do you live? Peter I want to move in, rent free.

Commenter

Quantum of Solace

Location

Date and time

August 28, 2012, 8:15AM

Quantum, I rent a house that I live in and I own a house that someone else lives in. I'm not holding on to houses or land that aren't being used. The point of squatter's rights is not to let people live rent-free. It's to stop people from leaving houses to sit and go to waste.

When I was young, we lived in a house in the Netherlands that was *only* made available to rent because of squatter's rights. The people were overseas for a year. They would have rather kept it empty, but because of squatter's rights they decided to rent it out. This is exactly why it's needed here.

Get a Grip - then quadruple the rates for these properties. Empty blocks and houses bring no benefit to the local economy. It would only be fair for the owners to pay extra for the disservice they are doing to the community.

Commenter

Peter

Location

Melbourne

Date and time

August 28, 2012, 9:37AM

Frankie, feel free to remove negative gearing as long as you're willing to get rid of your right to claim tax deductions on your work expenses as well.